AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREChargers go winless in AFC West with season-ending loss in Kansas CityAlthough the governor has won considerable business backing for his plan, consumer and labor groups say so far he has failed the affordability test. Schwarzenegger suggested earlier this year leasing the lottery to help shore up the state budget, but the idea of using the proceeds for health care is new. The governor said California’s lottery generates less money per capita than many other states. “There is someone who will do a better job, who will get more money for the taxpayers,” Schwarzenegger said. Under one scenario, according to the governor’s finance aides, a private management company would pay $37 billion for a 40-year lease. The state, in turn, would use that money to create a $2billion-a-year annuity to pay for health care (education, which currently receives about $1.1 billion annually from the lottery, would be unaffected). The current price tag on the governor’s health care plan is $14 billion a year. Hoping to rejuvenate lagging negotiations over health care reform, Gov. Arnold Schwarzenegger said Tuesday he wants to use the state lottery to help finance his plan that would require all Californians to have health insurance. The Republican governor said at a news conference that he wants to lease the lottery to a private group and use about $2 billion annually of the proceeds to pay for his health care plan, without diverting any lottery funds used for education. The proposal would be just part of a larger health care financing initiative that voters would decide the fate of in November 2008. But before he can go to the ballot, Schwarzenegger must reach agreement with Democrats on a sprawling health reform plan. The main sticking point remains cost: Schwarzenegger wants to require everyone to carry insurance, but Democrats say he must first demonstrate how he would make it affordable for lower- and middle-class Californians. The lottery funding stream for health care, however, would expire within 15 to 25 years, at which point the state would have to find money to replace it. There are also questions about whether the fund would grow fast enough to keep up with spiraling health care costs. Beyond that, advocates for the working class said that a plan that encourages an increase in lottery sales would disproportionately hurt lower-income people, whom studies show spend more of their money on the lottery. “The governor’s proposal would ask more Californians, particularly low-income Californians, to gamble away more of their hard- earned dollars to pay for health reform,” said Jean Ross, executive director of the California Budget Project, which researches issues that affect the working class. Nonetheless, tapping the lottery could allow the governor the sidestep a more politically dicey idea he’d been considering: Asking voters to raise the sales tax to pay for health care. Pollsters said that including a sales tax hike in a health care ballot initiative would jeopardize its chance of passing. Schwarzenegger has made national headlines since he unveiled his universal health plan in January – a plan that some say could become a national model – but it was based on a 10-page document outlining his ideas. Tuesday was the first time that he released an actual bill, spelling out the details. The governor shifted on a few issues. His January proposal included a 4 percent payroll fee on businesses with fewer than 10 employees that don’t provide health care. Now, he proposes exempting only businesses with a payroll of less than $100,000. Those with payrolls between $100,000 and $200,000 would pay 2 percent if they don’t provide insurance; those with payrolls over $200,000 would have to pay 4 percent. A few other changes: Schwarz- enegger dropped a proposed 2 percent tax on doctors’ revenues. And, while he would still bar insurers from rejecting people with pre-existing conditions, he would allow rates to be set based on a person’s health status – within limits – for several years. Schwarzenegger also proposes a new tax credit for some lower- income people who wouldn’t have qualified for subsidies under his original plan. Finally, while he would require everyone in the state to carry insurance, his plan does not spell out what the minimum benefit package they’d have to buy would include. Critics say that could lead to a situation where people are forced to pay hundreds of dollars a month for insurance, but end up with coverage that essentially only covers them in the case of a catastrophe. “If you’re going to require everyone to have insurance,” said Beth Capell, a health care lobbyist who represents labor, “you ought to make sure they’re going to be able to afford to pay the premiums and get good care.” Schwarzenegger said he wants to complete a health care deal with lawmakers within two weeks. [email protected] (916) 441-4603160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!